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# All Chapterproblems - Answers to Problems in Textbook 1 a b...

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Answers to Problems in Textbook 1. a. Gross domestic product (GDP) equals consumption expenditures plus private domestic investment plus government purchases of goods and services plus net exports. To compute GDP, we first need to compute private domestic investment and net exports. The information given allows us to calculate private domestic investment by adding net fixed investment plus depreciation plus the change in inventory. Therefore, private domestic investment equals 688.2 + 990.8 + 56.5 = 1735.5. Net exports equal exports minus imports, so that net exports equal 1,096.3 - 1,475.8 = - 379.5. Therefore, gross domestic product equals 6,739.4 + 1,735.5 + 1,721.6 + ( - 379.5) = 9,817.0. b. Gross national product equals gross domestic product plus receipts of factor income from the rest of the world minus payment of factor income to the rest of the world. Therefore, gross national product equals 9,817.0 + 382.7 - 343.7 = 9,856.0. c. Net domestic product equals gross domestic product minus depreciation. Therefore, net domestic product equals 9,817.0 - 990.8 = 8,826.2. d. Domestic income equals net domestic income minus indirect business taxes. Therefore, domestic income equals 8,826.2 - 664.6 = 8,161.6. e. Personal income equals domestic income minus undistributed corporate profits minus corporate income taxes minus social security contributions plus government transfer and interest payments. Therefore, personal income equals 8,161.6 - 130.3 - 265.2 - 702.7 + 1,366.3 = 8,429.7. f. Disposable personal income equals personal income minus personal taxes. Therefore, disposable personal income equals 8,429.7 – 1,235.7 = 7,194.0. g. Personal saving equals disposable personal income minus consumption expenditures minus personal interest payments. Therefore, personal saving equal 7,194.0 - 6.739.4 - 286.2 = 168.4. 2.

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All Chapterproblems - Answers to Problems in Textbook 1 a b...

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